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A company is using the EOQ model to manage its inventories. Suppose its annual demand doubles,...

A company is using the EOQ model to manage its inventories. Suppose its annual demand doubles, while the ordering cost per order and inventory holding cost per unit per year do not change. What will happen to the EOQ?

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Answer #1

when demand rise to double i.e. D to 2D then effect can be summarised as follows.

2* D * C/ H=

assumed figure for EQO= 2*4800*5/ 10

= 69.28

now demand double 4800 to 9600

=2*9600*5/ 10

=97.98

so change is Eoq = 69.28/97.98*100

= 70.71 %

so eoq rise by 70.71 %

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